LFS00AS2 Ethics and Profitability Argumentative Essay Help

Socially/ Environmentally Responsible vs. Profitability?

Today’s consumer is deemed to be more socially and environmentally conscious, and this awareness has been influencing their purchasing decision. With more and ever stress upon being socially and environmentally conscious, the question arises as to whether both socially responsible and making money go together or not? Well it seems much possible. 

First, it is important to understand the concept of corporate social responsibility (CSR) that involves the expenditure of the company’s resources being made at the discretion of the management on doing “good work” for the whole community while refraining from doing the “bad work” that might harm the community. Such a role of company might indicate that companies have to face escalated expenditures that might threaten their pursuit of profit, but it is not the case. In other words, it is well argued by the theorists that companies, by making lesser profits, might feel much more satisfied as the net social benefits offset the diminishing returns (McCabe, 1992).

According to Schreck (2011), profitability is perceived to be a critical component of CSR as it reminds the firms to indulge into the behavior of “the right thing to do”. It is generally held that the CSR activities lead to improved company profits by enhancing the public image of the company in the market. When the company’s have a better image in the market, the sales get boosted and the employees’ loyalty improves while attracting the better personnel pool to the firm. By focusing on sustainability, the firms tend to focus more on lowering the costs, utilizing the resources in better way and improving efficiencies of the whole system. 

The research conducted by Kolk and Lefnant (2010) indicated that CSR activities tend to offer potential benefits and drive the corporate profits through improvement in the efficiencies, reduction in waste and enhancement of the public image of a company. One of the major reasons of boosting sales through CSR is that consumers tend to choose the products that are made from sustainable sources rather than buying the products that negatively impact the environment. It is generally argued that firms can contribute ecologically without suffering economically.

The consideration about gaining profitability through CSR and sustainable activities support the concept of “triple bottom line” i.e. people, profit and planet. However, the concept of “separation of ownership and control” might make the achievement of both profitability and being environmentally responsible a tough call. By divorcing the ownership and control, the management feels it free to run the company in favor of community’s interest while the stakeholders’ interests of wealth maximization seem to be threatened.